What To Expect When Genesco Reports Q4

Earnings Preview: Genesco's Q4
Journeys.
FN Archives.

Analysts say they are not expecting a ton of surprises when Genesco Inc., parent company of Lids Sports Group and family-footwear chain Journeys, reports Q4 and full-year earnings Friday.

Given a recent preannouncement, a 4Q surprise is minimal with strength at Journey’s offset by heightened promos at Lids and Schuh,” wrote Susqehanna LLLP analyst Christopher Svezia Tuesday. “As such, we believe focus turns to FY17, which could see meaningful earnings growth for the first time in years as management pivots from mixed growth initiatives toward enhanced productivity (Lids) and capital allocation, at least, in the medium-term.”

In January, Genesco preannounced that its total comp sales had climbed 5 percent in Q4 to date but that its efforts to reduce inventory at Lids Sports Group and “challenges” in the Schuh Group business had led to lower guidance for the fiscal year. Genesco now expects adjusted earnings per diluted share for the fiscal year ending Jan. 30, 2016, to be in the range of $4.30 to $4.40 per share, from the previous range of $4.50 to $4.60.

Genesco chairman, president and CEO Robert Dennis said the firm was making “a final, aggressive push” to liquidate excess inventory by yearend at its once-struggling hatmaker, Lids Sports Group. Just a few days after, Genesco announced that it had sold Lids Team Sports, part of Lids Sports Group, to sporting-goods marketer and distributor BSN Sports. And, a few weeks after that, on Feb. 5, Kenneth Kocher, SVP and president of the Lids Sports Group division, resigned from his post.

Sterne Agee CRT analyst Sam Poser saw Kocher’s exit as “the last part of the cleanup at Lids.”

We believe Lids’ business has stabilized, and a cohesive team appears to be almost completely in place for the long run. … We expect to see improvement in sales & margins beginning in FY17,” Poser noted.

During its Q4 preannouncement, the company also revealed that total comps at the firm’s family-footwear chain, Journeys, had grown 7 percent quarter-to-date, while comps at Schuh Group declined 2 percent and Lids advanced 5 percent.

In Q4, analysts expect Genesco to post diluted EPS of $2.13 and revenue totaling $939.42 million.

Svezia, however, is placing his bets above consensus. The analyst predicts fourth-quarter diluted EPS of $2.16.